Administrative Rules for the Reporting of Large Value and Suspicious Transactions by Financial Institutions (2007)

Transcription

1 Administrative Rules for the Reporting of Large Value and Suspicious Transactions by Financial Institutions (2007) Article 1 In order to prevent money laundering activities through financial institutions and regulate largevalue and suspicious transaction reporting of financial institutions, the Rules are formulated pursuant to the Anti-money Laundering Law of the People s Republic of China, the Law of the People's Republic of China On the People's Bank of China and other relevant law s and administrative regulations. Article 2 The Rules are applicable to financial institutions legally established within the territory of the People s Republic of China, which includes: (1) Commercial banks, urban credit cooperatives, rural credit cooperatives, post savings institutions, and policy banks; (2) Securities companies, futures broker companies, and fund management companies; (3) Insurance companies and insurance asset management companies; (4) Trust Investment companies, financial asset management companies, finance companies, financial leasing companies, automobile finance companies, and money brokerage companies; (5) Other institutions identified and proclaimed by the People s Bank of China. Institutions engaged in remittance, payment and clearing, and sales of funds are obligated by the Rules to report large-value and suspicious transactions. Article 3 The People s Bank of China and its subsidiaries are responsible for supervising and inspecting the reporting of large-value and suspicious transactions by the financial institutions. Article 4 The People s Bank of China establishes the China Anti-money Laundering Monitoring and Analysis Canter to be responsible for receiving the RMB and foreign exchange large-value and suspicious transaction reports. When the China Anti-money Laundering Monitoring and Analysis Centre discovers that the essential elements of the large-value transaction or suspicious reports provided by a financial institution are not complete or accurate, it can send a notice of supplementation and correction to the financial institution that files the report. The financial institution shall supplement and correct the report within five business days after receiving the notice. Article 5 Financial institutions shall establish posts to specialize in anti-money laundering efforts and designate specific personnel to be responsible for reporting large-value and suspicious transactions. Financial institutions shall set up internal control and operation program for reporting large-value and suspicious transactions and report the program s to the People s Bank of China for record. Financial institutions shall supervise and regulate their subsidiaries on their implementation of the large-value and suspicious reporting program. Article 6

2 Financial institutions and their staff shall keep confidential the information concerning suspicious transaction reports and shall not provide such information to any organization or individual. Article 7 Financial institutions shall timely report the large-value transactions to the China Anti-money Laundering Monitoring and Analysis Centre in electronic way within five business days after the date of transactions, through their headquarters or institutions designated by headquarters. For financial institutions that do not have headquarters or are not able to file large-value transaction reports to the China Anti-money Laundering Monitoring and Analysis Centre through headquarters and institutions designated by headquarters, the means of reporting shall be decided by the People s Bank of China. When the customers conduct large-value transactions through their accounts opened in domestic financial institutions or banking cards, the financial institutions that opened the accounts or the banks issuing the cards shall report such transactions. When the customers conducted large-value transactions through their overseas banking cards, the banks that receive the bills shall report them. When the customers conduct large-value transactions not based on any account or banking card, the financial institutions that deal with such businesses shall report such transactions. Article 8 Financial institutions shall file a suspicious transaction report to their headquarters. The headquarters of the financial institutions or the institutions designated by headquarters shall report the suspicious transactions within 10 business days after the date of transaction to the China Antimoney Laundering Monitoring and Analysis Centre in electronic w ay. For financial institutions that do not have headquarters or are not able to file suspicious transaction reports to the China Anti-money Laundering Monitoring and Analysis Centre through the headquarters or the institutions designated by headquarters, the means of reporting shall be decided by the People s Bank of China. Article 9 Financial institutions shall report the following large-value transactions to the China Anti-money Laundering Monitoring and Analysis Centre: (1) Any single cash transaction with the value or any series of cash transactions with the accumulated value in a single day over RMB 200,000, or over US$10,000 equivalents in foreign currencies such as cash deposit, cash withdraw al, sale and purchase of foreign exchange by cash, cash exchange, cash remittance, cashier s check payment and other cash transactions. (2) Any fund transfer above RMB 2,000,000 or US$200,000 equivalents in foreign currencies among bank accounts of legal persons, other organizations and firms created by self-employed persons, in a single deal or in accumulative terms on the day of the transactions; (3) Any fund transfer above RMB 500,000 or US$100,000 equivalents in foreign currencies among bank accounts of natural persons, or among bank accounts of the natural persons and legal persons, other organizations and firms created by self-employed persons, in a single deal or in accumulative term s on the day of the transactions; (4) Any cross-border transaction over US$ 10,000 equivalents in foreign currencies in a single deal or in accumulative term s on the day of the transactions, and one party involved in the transaction is a natural person. The value of accumulative deals is calculated and reported on single customer, unilateral transaction basis according to

3 receipt and payment of fund, unless otherwise provided for by the People s Bank of China. In case that the customer conducts financial transactions with securities companies, future broker companies, fund management companies, insurance companies, insurance asset management companies, trust investment companies, financial asset management companies, finance companies, financial leasing companies, automobile financial companies and money brokerage companies, etc., and transfers fund through bank account, commercial banks, urban credit cooperatives, rural credit cooperatives, post savings institutions or policy banks shall file largevalue transaction report to the China Anti-money Laundering Monitoring and Analysis Centre in accordance with the stipulations in item (2), (3) and (4) of this Article. The People s Bank of China can adjust the large-value reporting standard stipulated by this Article according to actual need. Article 10 Financial institutions can choose not to file a report on large-value transaction if the transaction falls under one of the following conditions and is not discovered to be suspicious: Article 11 (1) Time deposit is not directly withdrawn or renewed When expired. Instead, its principal or its principal plus its whole or partial interest is deposited in another account under the same accountholder s name at the same financial institution by the customer. The principal or the principal plus its whole or partial interest under his demand deposit account is transferred for time deposit to another account under the same accountholder s name at the same financial institution by the customer. The principal or the principal plus its whole or partial interest under his time deposit account is transferred for demand deposit to another account under the same accountholder s name at the same financial institution by the customer. (2) Transactions between different types of foreign currencies in the course of firm-offer foreign exchange transactions conducted by natural persons; (3) One party involved in the transaction is the China Communist Party and or the government organ, administrative organs, judicial organs, military organs, organs under the Chinese People s Political Consultative Conference, the Chinese People s Liberation Arm y and or the arm ed police force at various levels. Various types of subordinated enterprises of the above organizations are excluded; (4) Inter-bank lending funds and bonds transaction in the inter-bank bonds market; (5) Gold transactions conducted by the financial institution in the gold exchange; (6) Internal fund allocations in financial institutions; (7) Transactions under the transfer loans of international financial organization and foreign government loans; (8) Debt swap transactions under international financial organization and foreign government loans; (9) Tax, correction of errors in account and interest payment in the commercial banks, urban credit cooperatives, rural credit cooperatives, post savings institutions and policy banks; (10)Other situations stipulated by the People s Bank of China.

4 Commercial banks, urban credit cooperatives, rural credit cooperatives, post savings institutions, policy banks, trust and investment companies shall report the following transactions or activities as suspicious transactions: (1) Fund being moved out in large quantities after com ing into a financial institution in small amounts and in m any batches within a short period of time or vice versa, which obviously does not conform to identification of customer, financial position and operation business; (2) Receipt and payment of funds occur between the same payee and payer frequently over the short term, and the sum of transaction is close to the standards of large-value transactions; (3) Legal persons, other organizations, firms created by self-employed persons frequently receive remittance over the short term, which is obviously unrelated to their businesses; or natural persons frequently receive remittance of legal persons and other organization over the short term; (4) Bank accounts that have been idled for a long time are activated for unknown reasons or bank accounts that have been normally low in fund flows have abnormal in-flow of funds all of a sudden with large amounts of receipts and payments over a short period of time; (5) There is an obvious increase during a short time of flows of funds for customers or frequent receipt and payment of large amounts of funds for customers from areas, regions, countries or jurisdictions where drug trafficking, smuggling, terrorism, gambling and tax evasion through the use of an offshore financial centre are prevalent; (6) Several bank accounts are opened under the same accountholder s name and cancelled without proper reasons, or large amounts of receipts and payments of funds occur before the cancellation of accounts; (7) Repayment of large value loans is made ahead of schedule, but does not conform to the financial position obviously; (8) Most of the RMB funds of the customers for purchasing foreign currencies for overseas investment are cash or funds transferred not from the same bank account; (9) The customer asks for a swap transaction between domestic and foreign currencies, but sources and purposes of its funds are suspicious; (10) The customer often deposits traveller s checks written abroad or deposit of drafts in foreign currencies, which do not conform to its business position; (11) Foreign-funded enterprises make investment in cash of foreign currencies, or after investment funds are in place, they transfer them overseas quickly over a short period of time, which is not commensurate with their needs for payment in production and operations; (12) Investment capital from the foreign party in foreign-funded enterprise exceeds the approved sum or the foreign direct debt borrowed is inwardly remitted from an unrelated enterprise in the third country; (13) Securities firms instruct the banks to out-transfer funds that are unrelated to securities transactions and settlement, which is not commensurate with their business position;

5 Article 12 (14) Securities firms frequently remove and borrow foreign exchange funds in large amounts through the banks; (15) Insurance companies compensate or refund premium s for the same policyholders in large amounts though the banks; (16) Natural persons make frequent cash receipts and payments through bank accounts, or when they make one-time cash deposit and or withdraw al at large values which are not consistent with the customer s profile; (17) After frequently receiving foreign exchange from overseas in their foreign exchange bank accounts, residents ask the banks to issue traveller s checks or drafts, or nonresidents ask the banks to issue traveller s checks and or drafts for them to bring out of the country, or frequently place orders for and cash traveller s checks and drafts in large amounts after frequently depositing foreign currencies in cash; (18) Multiple residents within the border of China receive remittance from one offshore account, at which the transfer and purchase of foreign exchange is operated by one or a few people. As for the following transactions or activities, securities companies, futures broker companies and fund management companies shall report the transactions as suspicious transactions: (1) The customer settlement account frequently receives and pays capital in the sum close to the large-value cash transaction report s standard without clear reasons, indicating obviously that the purpose of the operation is to evade the supervision of large-value cash transactions; (2) The customer without transaction or with a small sum of transaction demands to transfer a large sum of money to other accounts without clear transaction purpose or use; (3) The customer w hose securities account idles for a long period of time while settlement account receives and pays a large sum of capital frequently; (4) An account idling for a long period of time starts operation suddenly and without clear reasons, and has a large amount of securities transactions during a short period of time; (5) Business relationship with high-risk money laundering countries or regions; (6) The customer buys and sells a large amount of securities in a short period of time after opening an account and then closes the account; (7) The customer has no or small amount of futures transactions for a long period of time and his or her settlement account receives and pays a large amount of capital; (8) The customer has no transaction for a long period of time and suddenly has frequent futures transactions during a short period of time without any clear reason, and the capital involved is enormous; (9) The customer frequently takes one futures contract as object, opens at certain price while at the same time opens in reverse direction at approximately same price, with the same amount or approximately the same amount before closing out and exiting to draw money; (10) At the completion of a business transaction with imported commodities, a customer serves as the selling party of the futures transaction yet cannot provide complete custom s

6 declaration and tax payment receipt, or provide fabricated and false customs declaration and tax payment receipt. (11) The customer demands to transfer fund shares due to non-transaction reasons yet cannot provide legal certification documents; (12) The customer processes the transfer of fund share custody frequently without proper reason; (13) The customer demands to change its registered information yet cannot provide required supporting documents and materials to be clear of suspicion of fabrication and alternation. Article 13 As for the following transactions or activities, insurance companies shall report the transactions as suspicious transactions: (1) Separate application but single withdrawal, or single application but separate withdrawal, without reasonable explanations; (2) Frequent applications, withdrawals, or alterations of insurance type and amount; (3) The insurant pays unusual attention on the auditing, insurance examination, claim settlement, payment and withdraw al regulations of the insurance company instead of on the guarantee function of insurance products and the benefits of investment accounts; (4) The customer claims the loss of large-value invoices at time of withdraw al within the hesitation period, or the same insurant withdraw s for many times at short period and the amount of loss of invoices is large; (5) Relevant obtained information of insurant, insured and beneficiary such as name, residential address, contact way and financial status are not real; (6) Any obvious discrepancy between the purchased insurance product and the presented need, customers persist in buying after financial institutions and their staffs explain; (7) The customer purchases large value insurance by single payment of the premium s and does not conform to its economic status; (8) For large value insurance, the customer withdraw s right during the hesitation period or shortly after the effective date of insurance contract or withdraw cash, and require insurance companies to remit returned premium s into the third party account or other accounts except non- payment account. (9) The customer pays no attention to the great economic cost that may be brought by withdraw al and insists on withdraw ing without reasonable explanation; (10) The customer pays obvious extra premium payable of this term and requires the return of exceeding part right afterwards; (11) The insurance broker pays premium s on other s behalf but fails to state the source of the fund; (12) The legal persons and other organizations insist on requiring the premium s to be returned in cash or transferring into non-payment account without reasonable explanation; (13) The legal persons and other organizations pay the first period of premium s or single premium s from account other than that of their entity or from their overseas bank account;

7 Article 14 (14) Paying the premium s for an individual through a third party without reasonable explanation of the relationship among the third party and the insurant, the insured and the beneficiary; (15) The business is related to a country and region with high money laundering risks; (16) The insurant insists on using cash to insure, indemnify, pay premium s, withdraw premium s or insurance policy value, or to pay other funds of large amount and with proper reasons; (17) The customer requires the insurance companies to remit the fund to a third party other than the insured and beneficiary when the insurance company indemnifies and pays premium s, or the customer requires the insurance companies to remit returned premium s and insurance policy value to persons other than the insurant. Except for situations stipulated by the Article 11,12 and 13, financial institutions and their staff shall file suspicious transaction report to China Anti-money Laundering Monitoring and Analysis Centre in case that they discover abnormality of transaction amount, frequency, flow, nature, etc. and the transaction is considered to be suspicious after analysis Article 15 Financial institutions shall analyze and identify the suspicious transaction reported to the China Anti-Money Laundering Monitoring and Analysis Centre in accordance with the Rules. If there are proper reasons to believe that the customer or transaction is relating to money laundering, terrorist activities and other law violating and criminal activities, financial institutions shall report to the local People s Bank at the same time and cooperate with its anti-money laundering administrative investigation. Article 16 If any transaction falls into both the large-value transactions and the suspicious transactions categories, financial institutions shall file the large-value and suspicious transaction reports respectively. If any transaction meets m ore than two large-value reporting standards, financial institutions shall file large-value transaction reports according to the standards respectively. Article 17 Financial institutions shall, according to the essential elements in large-value transactions and suspicious transaction report attached to the Rules (the Content of the essential elements w ere attached to the Rules) provide authentic and complete transaction information, and formulate the electronic documents of large-value transactions and suspicious transactions. Specific reporting form and requirement shall be issued by the People s Bank of China. Article 18 When a financial institution is in breach of the Rules, the People s Bank of China shall impose penalties on the financial institution in accordance with the Article 31, 32 of the Anti-money Laundering Law of the People s Republic of China. Depending on different situation, the People s Bank of China could propose to the China Banking Regulatory Commission, the China Securities regulatory Commission, and the China Insurance Regulatory Commission to adopt the following measures: 1) Order the financial institution to stop its operation for internal rectification or withdraw its business license,

8 2) Disqualify the directors, senior managers and other person(s) directly responsible for the misconduct of the financial institutions from engaging in financial businesses. 3) Order the financial institution to impose disciplinary sanctions on the directors, senior managers and other person(s) directly responsible for the misconduct of the financial institution. In case that the county-level sub-branches of the People s Bank of China discover any financial institution in violation of the Rules, they shall report such violation to branch at higher level. The branch at higher level shall impose sanctions or propose suggestions in accordance with the aforementioned stipulation. Article 19 The People s Bank of China and its branches above the prefecture level shall abide by the Rules of Administrative Punishment Procedure of the People s Bank of China to impose administrative sanctions on the financial institution that violates the Rules. Article 20 Terms contained in the Rules are defined as below: Short-term refers to the period within 10 business days, including 10 business days. Long-term refers to the period more than one year. Large Amounts refers to the situation where the value of transaction(s) in a single deal or accumulative deals is lower but close to the standard of large-value transactions. Frequently refers to the occurrence of transactions for more than 3 times a day or the occurrence thereof every business day for over 3 consecutive days ; Above is used to refer the situation that includes the number mentioned. Article 21 The Rules com e into effect as of M arch 1st, 2007, when Administrative Rules for the Reporting of Large-Value and Suspicious RMB Payment Transactions and Administrative Rules for the Reporting of Large-Value and Suspicious Foreign Exchange Transactions by Financial Institutions that were issued by the People s Bank of China on M arch 1, 2003 shall be simultaneously abolished.